States to get $3 billion for Medicaid system upgrades

The Centers for Medicare & Medicaid Services finalized a rule in December to permanently retain funding that helps states upgrade the technology they need to allow their residents to enroll in Medicaid. 

The move extends a 2011 regulation — which was set to expire last month — that raised CMS' matching rate to 90% from 50% for money that states spent on creating new Medicaid eligibility and enrollment systems. That regulation also included a federal funding bump to 75% from 50% for maintaining and operating those systems.

The rule benefits the 28 states and territories that have out-of-date Medicaid systems, many of which have experienced difficulties under the pressure of Medicaid expansion, according to the final rule. Last year, the agency expressed its concern to several states, including Alaska, California and Kansas, about ongoing technical and administrative woes that delayed Medicaid access in their states. Only nine states have eligibility and enrollment systems that would not need replacing: Colorado, Florida, Idaho, Montana, New Mexico, North Carolina, Oklahoma, Texas and Utah.

“Experience with the Affordable Care Act implementation has shown that Medicaid eligibility policies and business processes benefit from continued updating and strengthening,” CMS said. The agency also noted that system transformations are needed to help enroll millions of newly eligible individuals and renew eligibility for existing enrollees, as well as to help states operate more seamlessly with health insurance marketplaces, verify information from applicants electronically and incorporate a streamlined application that can be used to apply for multiple sources of coverage and financial assistance.

The cost of the funding boost was originally estimated at $1.1 billion over the first four years. However, the final rule estimates the increase will cost $3 billion between 2016 and 2025.